Most hedge funds are no longer looking up at their high-water marks, and most of the illiquid assets that burned the industry are wet once again, according to a new report.

Hedge funds earned an average 19% return last year, with more than four in five funds in positive ground. Even better for the industry, hedge funds have recouped 77% of their 2008 losses, according to Credit Suisse Tremont Index.

The cause of many of those losses is also no more: An estimated 58% of the illiquid assets that “impaired” hedge funds have returned to standard liquidity status. Some $102 billion in assets have been rehydrated, leaving $72 billion high and dry.

One result of that illiquidity and those losses is that more hedge funds are open to new investment than before the economic crisis struck. Just 13% of funds are currently closed, down from 17% in November 2007. That undoubtedly has something to do with the $74 billion in redemptions the industry suffered last year.

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